Edge of Chaos is a political podcast starring Joe Ryan and Neurotoxin. Its aim is to have a free-flowing discussion of news and current events that also examines the empirical outcomes of public policy, avoiding biases based on ideology and policy intentions. Listener discretion is both advised and encouraged.

Saturday, July 27, 2013

Obamacare Driving Down Healthcare Costs? Don't Make Me Laugh.

Let's take a moment to address the recent claims that the State health exchanges set up under Obamacare are "driving down health care premiums". (Spoiler: They're complete bullshit.)

What these claims are factually referring to is the per-subscriber premiums that private HMOs are offering the State exchanges created in their competitive bidding. Those per-subscriber premiums are in fact lower than comparable benefit HMO premiums on the private market, although proponents and the media greatly exaggerate the gap by comparing the State exchange premiums to the average per-subscriber costs in each State - an average that includes more expensive PPOs and HMOs with much better benefit plans. It also helps to remember that these are the same mega-corporations whose lobbying to regulate smaller competition out of existence has driven the health care industry into the toilet and then got Obamacare passed, and that they are now bidding competitively on new profit subsidized via tax dollars. Nevertheless, the exchanges are going to cover people that didn't previously have coverage, and will do so at a lower cost than private market premiums - so this is still serving its purpose, right? Wrong.

New business for private corporations that is tax-funded, regardless of what it plans to pay them, simply BEGS the question - where is the money going to come from? Whether the States have agreed to set up the exchange or declined and the Federal government plans to come in and do it for them, the grand majority of the funding is still Federal, and the money is slated to come from 3 main sources: the employer mandate to either provide health care benefits or pay a tax into these exchanges, the individual mandate under which some would presumably purchase the State-subsidized plans, and savings from the Federal government having to reimburse hospitals for emergency services to uninsured Americans (a HUGE Federal expense).

Let's examine the viability of these funding sources. There are a number of unintended consequence issues with the employer mandate, but let's stick with the simple fact that it has already been delayed for a year because Federal bureaucracies admittedly can't handle the job of enforcing it. The individual mandate is a complete joke - it is to be enforced through personal tax filing and no American has EVER told the IRS the truth when filing their taxes, and the Supreme Court ruling on Obamacare took away any prospect of criminal penalties for non-compliance beyond a simple fine for underpaying taxes. There's also the sizable proportion of Americans that don't ever file their personal taxes, and they overlap considerably with the proportion of Americans without health care coverage. In light of both mandates being doomed to fail, how anyone expects there to be fewer emergency services rendered to the uninsured is beyond me. Some are freaking out over hospitals shutting as the Federal government will no longer reimburse these, but I'm not worried - hospitals are a powerful lobby and will get their money from the government. On top of these funding sources having 0 reliability, we live in an age of a broken tax base, chronic revenue deficits at both the State and Federal levels, and a political culture in which neither raising taxes nor significant increases in government borrowing to pay for this has any chance of success - no matter how desperately Michael Moore or Rachael Maddow tantrum that it's necessary.

To summarize - THE GOVERNMENT HAS NO MONEY TO PAY FOR THESE PREMIUMS, EVEN THOUGH THEY ARE SLIGHTLY LOWER THAN THE PRIVATE MARKET. What we have here is just another grossly underfunded Federal public benefit subsidy for a small cartel of private corporations, and every such system we have in place is suffering from reductions in what the benefits cover, long lines and delays in payments which make medical service providers either opt out of these HMOs OR raise premiums for private market ones to make up the difference, and the ramp up in co-pays, out-of-pocket minimums, and premiums for subscribers to keep the system afloat.

The psychiatric disorder of being economically liberal is characterized by a pervasive pattern of only seeing one side of the equation, and hopes that loud, emphatic ideological interruptions along the lines of "everyone deserves access to health care!" will drown out anyone pointing out the other. I agree that all Americans should have access to health care and that we would be better off as a country if they did - but if you genuinely believe that THIS clusterfuck is going to accomplish that objective, I offer for your consideration the following shocking facts:

Santa Claus is not real.
Professional wrestling is scripted.
Your father put the quarter under your pillow when you lost your first baby tooth.


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